Article Courtesy of Daily
By Lidia Dinkova
Published December 11, 2018
Home construction giant D.R. Horton Inc. is accused in a lawsuit of failing to
pay its association dues, enforce collections and report the deficit to
residents of one of its Miami-Dade County communities.
The complaint alleged the homebuilder
wanted to avoid liens and foreclosures that would reduce
prices and hurt company profits.
The Arlington, Texas-based company built Mandarin Lakes with
875 single-family homes and townhouses along Southwest 140th
Avenue between Florida’s Turnpike and U.S. Highway 1 near
D.R. Horton managed the community by appointing employees to
the homeowner association board from 2004 to 2014, according
to the Nov. 30 complaint filed in Miami-Dade Circuit Court.
The developer retained control because it hadn’t sold 90
percent of homes, said attorney John Arrastia, who filed the
case against D.R. Horton. He is a partner at Genovese
Joblove & Battista in Miami.
The Mandarin Lakes Neighborhood Homeowners’ Association Inc.
is suing D.R. Horton and five company staffers who served on
the board. The lawsuit claims they had a conflict of
interest between their duties to the homeowners and to D.R.
Horton — and ultimately failed the residents.
John Arrastia of Genovese Joblove & Battista.
D.R. Horton didn’t respond to an emailed request for
comment. A voicemail left for Amalia Papadimitriou, one of the individuals
named in the suit, also wasn’t returned.
The lawsuit claims the D.R. Horton-appointed board was supposed to collect
assessments from Mandarin Lakes owners to pay for community operations but
failed to enforce payments. The developer was in a bind with units to sell
and prospects for some homeowners falling into foreclosure.
“The resale of foreclosed units would dramatically and negatively affect the
fair market value of D.R. Horton’s unsold units, which would lower the new
unit sales price, increase the difficulty in obtaining bank financing, and
depress both the number and profitability of sales,” the complaint said.
The Mandarin Lakes board ran up a $1.8 million deficit, which was inherited
by homeowners when they took control of the board Dec. 31, 2014. It breaks
down to a $1.07 million budget gap that D.R. Horton was supposed to have
closed while its staff ran the board and $838,000 owed to cable TV and
internet provider H-Control Inc., according to the complaint.
The gap stems from an agreement when D.R. Horton had its board in place for
the developer to fund any operating deficit that wasn’t covered by homeowner
assessments. D.R. Horton paid $865,633 of the total $1.9 million deficit it
was responsible for covering, the complaint said.
The complaint said homeowners have had no idea about the debt because the
budgets circulated by D.R. Horton’s board made the association look
“If the community in Mandarin Lakes is living and saying, ‘Hey everything is
going OK,’ and they are unaware that they have a $875,000 bill and they are
unaware that their budgets are artificially low, if they are not educated as
to what’s going on and then D.R. Horton just walks away, all of a sudden
look what you are left with. You are left with $1.8 million that’s missing,
and you don’t have a collections program in place to collect the
assessments,” Arrastia said. ”That really put the board of directors in a
very difficult position.”
Separately, D.R. Horton is accused of construction defects at Mandarin Lakes
and not fixing issues that now are estimated to cost $4 million. Issues
include water intrusion at the clubhouse and gym and planting trees too
close to homes and utilities, which could result in cracked foundations and
sidewalks, according to the complaint.
While association leadership was turned over four years ago, the lawsuit was
filed recently in part because it took some time for the new board to
perform an audit, research issues and trace the root of the debt.
The issues of D.R. Horton preventing foreclosures so it could sell units at
market rate and its obligation to close budget gaps are connected, Arrastia
“If they don’t sell out the community, then they can’t turn it over to the
unit owners. And if they can’t do that, then they are still obligated to
deficit-fund any deficit in operating expenses in the association,” he said.
The lawsuit seeks declaratory judgment on counts of breach of obligation to
deficit fund, negligent design, building violations, aiding and abetting
breach of fiduciary duty and vicarious liability against D.R. Horton. It
also lists breach of fiduciary duty counts against the five D.R. Horton
employees who served on the board.